m 50 to 100 percent in many cases are so less able to work that they must rely a much greater extent on their compensation. It was noted that persons in latter group have difficulty in obtaining employment and, if they do so, labor a very great disadvantage. Since 1952 the Congress has ratified this rate acture policy on three occasions by continuing to authorize greater proportionamounts for disabilities rated 50 percent and above. The most recent of these asures was enacted last fall as Public Law 87-645. On two occasions the Presiat stressed the particular needs of the more seriously disabled veterans and ommended to the Congress greater compensation increases for that group. The Veterans' Administration believes that the existing concept whereby the re seriously disabled veterans are provided greater relief through payment of portionately higher rates of compensation than those less seriously disabled is nd. We feel that to revert to the pre-1952 exact ratio among these rates of apensation, as H.R. 2582 proposes, cannot be adequately justified. The additional compensation payable to veterans on account of dependents s first authorized by Public Law 877, 80th Congress, approved July 2, 1948. at act was the product of extensive study and consideration by the Congress the subject of payment of additional benefits because of dependents to veterans itled to disability compensation. The legislative history indicates that one the reasons for limiting benefits provided by that act to persons 60 percent or re disabled was based on the fact that veterans of this group, because of the ious nature of their disabilities, are not generally in a position to supplement eir compensation payments by income from steady employment. Upon ther consideration of this subject in 1949, the necessary degree of disability entitlement to additional compensation was reduced to 50 percent by section 4 Public Law 339, 81st Congress. This requirement of eligibility has thus been intained by the Congress for almost 14 years.

Veterans with disabilities rated less than 50 percent are generally able to supment their compensation payments with other income. In view of the basic tification for the additional allowances for dependents, we do not believe that ese veterans, as a group, need the supplemental assistance from the Govern-nt proposed by section 2 of H.R. 2582.

PEACETIME GI BILL

You also requested my views with respect to the legislative proposals which uld establish a peacetime GI bill.

A number of such bills have been introduced in the House and referred to your mmittee. All of them would extend an education and training benefit modeled on that provided for Korean conflict veterans by the Veterans' Readjustment sistance Act of 1952. A substantial number of the bills would also provide n guarantee and direct loans. A few would extend other benefits. In most ses the eligible service period would be extended back to January 31, 1955, the d of the Korean conflict period. At least one bill, however, would start the gibility period with January 1, 1962, and confine the benefit to persons who ved in a combat zone as would be defined by the bill.

To place these proposals in proper perspective, let me recall that during the st few years substantial gain has been achieved in equalizing wartime and acetime benefits for servicemen who suffer an injury or disease as a result of eir service. Vocational rehabilitation was made available to post-Korean terans by Public Law 87-815, enacted last year. This law provides vocational unseling and the appropriate education and training to assist peacetime veterans th service-connected disabilities to qualify for suitable employment. We had commended such a program for several years and were exceedingly gratified to e it become law. In addition, other laws enacted in the 87th Congress provided at hospital and medical care for service-connected disabilities, both at home ad abroad, were to be made available to persons now serving in the military rvices on the same basis as had heretofore been provided for the wartime group. Looking back a little further, dependency and indemnity compensation for the idows, children, and dependent parents of veterans dying from service-connected uses makes no distinction between peacetime and wartime service. In 1958 unemployment compensation program was established for peacetime exrvicemen as they are termed in that act, and in 1960 war orphans' educational sistance was extended to the post-Korean group for so long as selective service in operation.

Thus, the principal benefits not now available to veterans of current service e the readjustment or so-called GI benefits which would be authorized by the

bills I have previously mentioned. Letters reaching us at the Veterans' Administration from servicemen and veterans manifest principal interest in an educational benefit.

The Veterans' Administration has opposed bills providing peacetime veterans' educational benefits on the ground that this type of benefit should be limited to situations where wartime service sharply disrupted career planning and called for special Government aid to ease the transition from wartime service back to civilian life. We have pointed out that service under current conditions does not present on a widespread basis the same rigors and hazards as does wartime service; that the specific period of service is known in advance and generally is of shorter duration than service during wartime; and that it has a much less disruptive effect upon the veteran's educational plans and his career than did extended wartime service with its many uncertainties. We consider particularly significant the fact that the impact of selective service is minimized by draft procedures which are designed to promote a reasonable integration of schooling or training plans with military service.

An education and training program for veterans generally, or on the basis of hardships and dangers for those serving in "hot spots," would not, in our opinion, be consistent with the traditional readjustment principle underlying the Korean and World War II programs.

I think in our consideration of this question that we must keep in mind we are only talking of individuals who are not disabled in service.

Prior to last year, we could provide a full range of benefits for the service disabled, with the exception of vocational rehabilitation; i.e., hospital and medical care, and in extrahazard and combat cases, disability compensation at the full wartime rates. This range of benefits for the service disabled has now been completed, as I mentioned earlier, by the enactment of Public Law 87-815. At the present time, after hospital and medical care have made training feasible for the veteran, we can provide educational and vocational counseling to determine what steps are needed to restore him to employability by providing at Government expense up to 4 years of schooling (longer if we find additional training necessary) and can supplement his compensation by a subsistence allowance while he is pursuing training.

Under all the circumstances, I do not believe that a readjustment education and training program is needed at the present time.

I believe the following cost estimates will also be helpful to your committee in evaluating the proposals before you:

To extend the full range of education and training benefits provided for Koreanconflict veterans to peacetime veterans, from February 1, 1955, onward, would result in a first fiscal year cost of approximately $291 million and a first 5-year total of nearly $2.164 billion. On the other hand, the first year cost of H.R. 2637, again using a beginning date of February 1, 1955, would approximate $119 million with a first 5-year total of approximately $859 million.

DEPENDENCY AND INDEMNITY COMPENSATION

The rate of dependency and indemnity compensation payable to widows is geared to basic active service pay. The widow is paid at a monthly rate equal to $112 plus 12 percent of the basic pay of her deceased husband. As the service pay is increased, the widows' rates under this program are automatically increased. The basic service pay was last increased June 1, 1958 (Public Law 85422). This automatic adjustment is not applicable to the specific monthly rates for parents and children.

The analysis of the pending military pay bill, which the Department of Defense estimates would provide increases in the rates of basic military pay averaging 14.4 percent, indicates that it would result in increases in widows' rates averaging about 2.9 percent. This would result in a first year's additional cost for widows of $5.9 million. The proposed increase added to the 1958 increase in widows' rates would result in an average of 4.1 percent since the inception of the program, ranging in individual cases from 0 percent to over 20 percent. As you know, we have recommended favorable action on H.R. 211 which would provide a cost-of-living increase in dependency and indemnity compensation rates for parents and children commensurate with the increase in the costof-living since the inception of the program. It is apparent that if the proposed pay legislation is enacted in its present form, the resulting widows' rates will not have been increased in all cases in keeping with the increased cost-of-living since the program began. It thus appears that an increase in the dependency and indemnity compensation rates payable to widows is in order.

my opinion the bill (H.R. 5250) recently introduced by your chairman opriately provides the needed increase. It proposes to increase to $120 the

which is the constant factor in each rate. It would thus have the effect of asing all widows' rates by approximately $100 annually. We estimate that rst year's cost of the increase would be approximately $11 million.

LEGISLATION ON COMMITTEE APPROVAL OF HOSPITAL PROJECTS

conclusion, Mr. Chairman, I want to mention specially the bill, H.R. 4347, h you recently introduced and which would call for a considerable change in procedure for planning and constructing our hospitals. This would require submit a copy to your committee of any plan, survey, or study concerning truction, modernization, renovation, or major repair of any hospital or ar facility at the time it is submitted to the Bureau of the Budget. Before actual beginning of such construction activity, we would be required to submit dditional report to the committee. If the committee adopted a resolution ng a 90-day period thereafter of continuous session of the Congress disapprovthe use of appropriated funds for such construction, the bill would prohibit of any existing or future appropriation to carry out the construction project. have furnished my report to the committee on H.R. 4347, and will be glad to uss this matter in the light of that report. While I fully appreciate the deep rest of your committee in the location of our hospitals for veterans, I have luded that this legislation would be detrimental to our mutual objective of viding the most effective hospital system which can be developed. want the committee to know, however, that I have no desire to withhold from committee information concerning projects which have been approved by the sident so that the committee will be fully apprised of what is proposed. If is desired, I am sure that we can work out a mutually satisfactory arrangement providing this information.

shall be pleased to present my report in further detail at this time if the mittee wishes, and to answer any questions with respect to my position on the cter. Mr. Chairman and members of the committee, I wish again to thank you for opportunity, and I shall be glad to discuss with you any questions which you e in connection with the items of particular interest to the committee in this ring.

Mr. GLEASON. I am extremely pleased that H.R. 211 has become V. As reported by your committee and approved by the Congress d the President, it increases by 10 percent the monthly rates of pendency and indemnity compensation payable for children and rents. Although H.R. 211 did not give an increase to widows, there e identical bills before your committee (H.R. 5250 and H.R. 5488) ich would do this. They propose to increase to $120 the $112 hich is the constant factor in each widow's dependency and indemty compensation rate. As you know, the other factor is a percente of the deceased husband's basic military pay.

H.R. 5555 (the proposed Uniformed Services Pay Act of 1963), hich would increase basic rates of military pay, passed the House of epresentatives on May 8, 1963, and is now pending before the Senate ommittee on Armed Services.

The increase proposed by H.R. 5250 and H.R. 5488, when added (a) the increase stemming from the 1958 Service Pay Act, and (b) he increase which would automatically result from H.R. 5555, if nacted with the rates prescribed in the bill as passed by the House, would total an average increase in widows' rates of approximately 10 ercent since the inception of the dependency and indemnity comensation program.

This increase is commensurate with the cost-of-living increase esulting from the enactment of H.R. 211. It is estimated that this measure would benefit approximately 122,700 widows the first year t a cost of $11,779,000.

The increased rates proposed by either H.R. 5250 or H.R. 5488 would be effective from the first day of the first calendar month which begins after the date of enactment. The increase in military pay proposed by H.R. 5555 would be effective October 1, 1963, or the first day of the first month after enactment, whichever is later.

Enactment of H.R. 5555 would require adjustment of widows' dependency and indemnity compensation rates, as would enactment of H.R. 5250 (or H.R. 5488). Thus, it would be desirable administratively to have both measures effective from the same date. If this were done, both adjustments in dependency and indemnity compensation rates for widows could be accomplished in one operation and one notice to payees would suffice, thus eliminating duplication of administrative cost and effort which would otherwise result.

I recommend favorable consideration of either H.R. 5250 or H.R. 5488 with an amendment which would give either bill the same effective date as the military pay bill.

(The VA report on these bills follows:)

VETERANS' ADMINISTRATION,

OFFICE OF THE ADMINISTRATOR OF VETERANS' AFFAIRS,

Hon. OLIN E. TEAGUE,

Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, D.C.

Washington, D.C., May 27, 1963.

DEAR MR. CHAIRMAN: This is in reply to your request for reports on identical bills, H.R. 5250 and H.R. 5488, 88th Congress.

The purpose of the bills is to increase the monthly rates of dependency and indemnity compensation payable to widows of veterans dying from serviceconnected causes.

Chapter 13 of title 38, United States Code (dependency and indemnity compensation) restates a portion of the Servicemen's and Veterans' Survivor Benefits Act (Public Law 881, 84th Cong., Aug. 1, 1956). This act established a new and modernized benefits program of dependency and indemnity compensation for survivors of veterans dying from service-connected causes on or after January 1, 1957.

The rate of dependency and indemnity compensation payable to widows is geared to basic active service pay. The widow is paid at a monthly rate equal to $112 plus 12 percent of the basic pay of her deceased husband. As the service pay is increased, the widows' rates under this program are automatically increased. The basic service pay was last increased June 1, 1958 (Public Law 85-422). H.R. 5250 and H.R. 5488 propose to increase to $120 the $112 which is the constant factor in each widow's dependency and indemnity compensation rate. As you know, H.R. 5555, 88th Congress (the proposed "Uniformed Services Pay Act of 1963"), which would increase basic rates of military pay, passed the House of Representatives and is now pending before the Senate Committee on Armed Services. The increase proposed by H.R. 5250 and H.R. 5488 when added to (a) the increase stemming from the 1958 Service Pay Act and (b) the increase which would automatically result from H.R. 5555 if enacted with the rates prescribed in the bill as passed by the House would total an average increase in widows' rates of approximately 10 percent since the inception of the dependency and indemnity compensation program. This increase is commensurate withthe cost-of-living increase of 10 percent in dependency and indemnity compensation rates for parents and children recently authorized by Public Law 88-21. Favorable consideration of H.R. 5250 or H.R. 5488 is accordingly indicated.

It is estimated that either bill would benefit approximately 122,700 widows the first year at a cost of $11,779,000. It is believed that the cost will remain about the same for the next 4 years.

The increased rates proposed by either H.R. 5250 or H.R. 5488 would be effective from the first day of the first calendar month which begins after the date of enactment. The increase in military pay proposed by H.R. 5555 would be effective October 1, 1963, or the first day of the first month after enactment, whichever is later.

actment of H.R. 5555 would require adjustment of widows' dependency and nity compensation rates, as would enactment of H.R. 5250 (or H.R. 5488). it would be desirable administratively to have both measures effective from me date. If this were done, both adjustments in dependency and indemnity ensation rates for widows could be accomplished in one operation and one e to payees would suffice, thus eliminating duplication of administrative nd effort which would otherwise result.

cordingly, we urge the effective date of H.R. 5250 (or H.R. 5488) be amended aform with the effective date of H.R. 5555. This could be accomplished riking all of section 2 following the word "effect" and inserting in lieu thereof he effective date of the Uniformed Services Pay Act of 1963."

line with the foregoing comment, I recommend favorable consideration of · bill with the indicated amendment.

e Bureau of the Budget advises that there is no objection to the presentation s report from the standpoint of the administration's program.

Sincerely,

J. S. GLEASON, Jr., Administrator.

r. GLEASON. Now I want to take up another matter-one wh ch particular interest to me. or a number of years this committee has had under serious concation numerous proposals to reopen the national service life rance program and you took positive action on the subject in the Congress.

ou will recall that prior to such action I advised the committee as the result of a thorough restudy of the veterans' insurance ram, I had concluded that the abrupt withdrawal without notice 951 of the privilege theretofore granted to millions of World II veterans to secure postservice insurance may well have caused ship in many instances.

any World War II veterans had left the service relatively young, ly to resume their schooling, unmarried, and with their insurace Is as yet undetermined. Under such circumstances many no bt dropped their NSLI in anticipation that they like the World I group to whom USGLI was available for many years after ice-that is, from 1928 to 1951, or 23 years-would be able to re Government insurance when their families and careers were blished.

urther, with respect to veterans who served prior to 1951, I conled that adequate recognition has not been given to the obligation he Government toward those veterans whose insurability has been ously impaired, if not lost, by reason of their service-connected bilities. I felt, therefore, that a limited extension of the right of erans to apply for postservice insurance by reason of their service heir country would be most appropriate.

am strongly supporting in this Congress a reopening of the NSLI gram for a period of 1 year.

During such period, veterans (including veterans with service-conted total disabilities, as well as those less than totally disabled), o served in the Armed Forces of the United States after October 7, 0, and before January 1, 1957, would be eligible to apply for new urance under the NSLI program, or increase protection now held to a maximum of $10,000.

Nonservice disabled veterans should be required to show good lth. No such insurance should be granted to certain Philippine my veterans whose insurance rights are now restricted by 38 U.S.C. ", or to persons in the active military service.